Saturday, 20 February 2016

Move towards end game (The Cyprus Weekly, 14 February 2016)

By Esra Aygin

Seen from the public angle it has not been the best of weeks for the Cyprus settlement talks. Leaders President Nicos Anastasiades and Turkish Cypriot Mustafa Akinci have publicly differed over interpretations of what has been agreed and Turkey’s president, Recep Tayyip Erdogan has been cited as saying that the return of Morphou is not on the table.

But behind the scenes a lot has already been achieved and those involved in the negotiations are already thinking ahead to planning and implementation.

“We are done with the bulk of the work in four chapters – governance and power sharing, EU, economy, property, although a couple of important outstanding issues remain,” said UN Special Advisor Espen Barth Eide.

He said it had been agreed that territorial adjustment and guarantees would be tackled at the end “but that does not mean that they have not been touched upon. What it means is that the maps and figures part of territory will be at the end”.

Quiet work has already started on security and guarantees.

“The final conclusions of this will be in that last phase … I have been quite frequently in touch with Athens and Ankara and London and the Security Council and all the interested players, and obviously with the sides, to try to see how we can prepare that phase.”

Eide is upbeat on the initial outcome.

“When I started I thought it would be the most important and the most difficult. But now I still think it’s important but not necessarily the most difficult,” Eide said.

“Traditionally security has been sought to the detriment of the other side … So you have to find a new model of security, where I am secure and you are secure, and I don’t mind that you are secure because your security is not to my detriment, that we are secure together.”

Practical implementation

While the political deals are being sorted out, the focus is already shifting to the implementation stage.

“We are in the early stages of that now,” said Eide, when asked if they were already in discussions on how the solution will be implemented.

“We are now into the technical phase where we are working on a number of very important issues, but issues that are not really politically divisive … It’s funding, it’s the euro implementation in the north, it’s the acquis, it’s preparing for constitutional work, its thinking about implementation.

“All these issues must be done.And they will take months.”

The main idea is to ensure that everything is ready for the moment the political deal is sealed.

“We want to make sure that when we get to the phase where the final, truly political, difficult issues are settled, we have the framework for the rest already down and prepared and planned,” said the UN envoy.

“This is the phasing …what will happen immediately, what will happen in two months.”

A package solution for finance

One key aspect of preparation relates to the economics of a solution.

“The IMF, the World Bank and the EU Commission are here constantly now. There is a big delegation almost every week looking at different economic aspects.

“They are working on issues like introduction of the euro to the north, banking sector, viability, debt pension obligations, all practical issues of an economy and all this work will be factored into a solution.”

As regards financing, Eide indicated that they were looking at a combination of options from the public and private sector.

“We are looking into a package solution that would involve two forms of international public support, plus international investment. And the two forms are a combination of grants or donations and guarantees that can help the foreign private investment.”

Guarantees on government bonds from highly-rated countries or institutions can help countries borrow at lower rates. The US, for example, has frequently guaranteed Israel’s bonds.

“The private investor would say I can take this risk because it’s not so high,” Eide explains.